An Inter-Sector Analysis of Electric Utilities in Newfoundland

C. Michael Wernerheim, Kandan Nadarajah


This paper investigates differences in productivity and cost structure between private and public utilities in Newfoundland, 1956-91. A conventional accounting approach, and a four-input translog cost function and associated share equations are used to estimate total and partial factor productivities, own and cross-partial elasticities of input demand and substitution, technical change, and scale economies. Differences in productivity are traced to the patterns of factor-bias of technical change, factor complementarities, and returns to scale. We find capital-using bias and diseconomies of scale in private utilities, and capital-saving bias and economies of scale in public utilities. The implications of these findings for policy warrant further study. Although preliminary, our results do not support the hypothesis that private utilities are more efficient than those in the public sector.

Full Text: